The government announced a further reduction in tax by increasing the non-refundable low and middle income tax offset (LMITO).

The reduction in tax provided by LMITO will increase from a maximum amount of $530 to $1,080 per year. It will be received on assessment after individuals lodge their tax returns, commencing from 1 July 2019 at the following rates:

Taxable income $37,000 or less – maximum of $255

Taxable income $37,000 to $90,000 – maximum of $1,080

Taxable income $90,000 to $126,000 – $1,080 less 3 cents for each dollar above $90,000

2. INSTANT ASSET WRITE-OFF EXTENDED AND THRESHOLD INCREASED

Small businesses, categorised as those with an annual turnover of less than $10 million will be able to immediately deduct purchases of eligible assets costing less than $30,000 from the night of 2 April 2019 to 30 June 2020.

For the 2019 financial year, there are three periods of instant asset write-off thresholds:

1 July 2018 to 28 January 2019 – less than $20,000

29 January 2019 to the day of 2 April 2019 – less than $25,000

The night of 2 April 2019 to 30 June 2019 – less than $30,000

Small businesses can continue to place assets which cannot be immediately deducted into the small business simplified depreciation pool and depreciate those assets at 15% in the first income year and 30% each income year thereafter. The pool balance can also be immediately deducted if it is less than the applicable instant asset write-off threshold at the end of the income year (including existing pools).

The write-off has been extended to medium sized businesses, categorised as those with an annual turnover of $10 million or more but less than $50 million. These businesses will be able to immediately deduct purchases of eligible assets costing less than $30,000 that are first used, or installed ready for use, from the night of 2 April to 30 June 2020.

The instant asset write-off threshold may be employed on multiple depreciating assets. Artworks may be eligible for the instant asset write-off under certain circumstances.

3. EMDG SCHEME – EXTRA $60 MILLION IN FUNDING

The government will invest an additional $60 million in the export market development grant (EMDG) scheme over the next three years to help more businesses export their products and services around the world.

The EMDG scheme reimburses up to 50% of eligible export promotion expenses above $5,000 provided that the total expenses are at least $15,000. It provides up to 8 grants to each eligible application.

To be eligible, a business must have:

income of not more than $50 million in the grant year;

incurred at least $15,000 of eligible expenses under the scheme (first-time applicants can combine 2 years expenses); and

principal status for the export business (some exceptions apply, such as non-profit export-focused industry bodies).

The business also must have promoted one of the following:

the export of goods or most services;

inbound tourism;

the export of intellectual property and know-how;

conferences and events held in Australia.

According to the government, last year over 3,500 small and medium enterprises accessed the EMDG scheme, employing almost 66,500 people and generating exports of $3.8 billion.

4. LIVE MUSIC GRANTS PROGRAM ANNOUNCED

The government announced a new grants program, budgeted at $22.5 million, to encourage small businesses to host live music.

Grants of up to $10,000 will be offered to encourage live music performances, not only in traditional venues but also in premises that currently only play background music to its patrons.

The grants will cover:

Artist costs;

Equipment purchases;

Infrastructure; and

Facility upgrades

Live music collecting society APRA AMCOS deserve congratulations for the way they engaged the Arts Ministry in relation to this innovative scheme, by commissioning export reports and working with hospitality and music industry groups.

One of their findings, which the grants program seeks to address, is that Australian businesses are willing to present live music but face two major hurdles – lack of venue expertise and finance to invest in the appropriate equipment.

According to APRA AMCOS:

‘It is clear live music provides a competitive advantage and stimulates increased consumption of food and beverage, encourages the night-time economy, promotes economic development across the nation for scores of hospitality and cultural workers, and provides work for emerging and established musical artists,’

The live music grants program will commence in 2020 and the funds will be allocated over four years.

5. CHANGES TO SUPERANNUATION

Individuals aged 65 and 66 will be able to make voluntary superannuation contributions from 1 July 2020 (both concessional and non-concessional) without needing to meet the contributions work test.

Currently, individuals aged 65-74 must work at least 40 hours in any 30-day period in the financial year in which the contributions are made (the “work test”) in order to make voluntary personal contributions.

The proposed extension of the work test exemption means that individuals aged 65 or 66 who don’t meet the work test, because they may only work one day a week or volunteer, will be able to make voluntary contributions to superannuation, giving them greater flexibility as they near retirement.

The proposed change will align the work test with the eligibility for the Age Pension, which is scheduled to reach age 67 from 1 July 2023.

The bring forward arrangements for non-concessional contributions will be extended to those aged 65 and 66. The bring forward rules currently allows individuals aged less than 65 years to make 3 years’ worth of non-concessional contributions (which are generally capped at $100,000 a year) in a single year.

Otherwise, the existing annual caps for concessional contributions and non-concessional contributions ($25,000 and $100,000 respectively) will continue to apply.

The age limit for making spouse contributions will be increased from 69 to 74. Currently, those aged 70 and over cannot receive contributions made by another person on their behalf.

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JOHN, BRISBANE
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As an art teacher, I have a wage of more than $40,000 but as an exhibiting artist I sometimes spend more on materials than I receive in sales. Particularly when I am preparing for a big show. I did not realise, until Michael explained it to me, that the loss on my practice could not be deducted from my teaching wage unless I met certain conditions. Michael was able to work out the conditions that allowed me to claim the loss on my artist practice and the additional refund came in handy for my next show.

REGINALD, SUNSHINE COAST
VISUAL ARTIST

As an art teacher, I have a wage of more than $40,000 but as an exhibiting artist I sometimes spend more on materials than I receive in sales. Particularly when I am preparing for a big show. I did not realise, until Michael explained it to me, that the loss on my practice could not be deducted from my teaching wage unless I met certain conditions. Michael was able to work out the conditions that allowed me to claim the loss on my artist practice and the additional refund came in handy for my next show.

REGINALD, SUNSHINE COAST
VISUAL ARTIST

I was referred to Michael by a musician friend, who is one of his clients. My former accountant had prepared my return for the first year where I had made good money and told me I had to pay $12,000 income tax. Michael explained that there were special tax rules for musicians and processed my return so that I did not have to pay the tax my former accountant said I had to pay.

MARCELLO, SYDNEY
MUSICIAN

This return is literally life changing. Paying off debt and starting savings. Thank you so much. I've recommended you to a whole bunch of people and even suggested those who've already had their tax done to check with you if it's worth an amendment. Honestly, between you and this barefoot investor book, I'm finally feeling more in control of my finances. Thanks so much!

SAMANTHA, MELBOURNE
FILM PRODUCER

My singing career was taking off but I was worried about when I had to register for GST and how much tax I had to pay. Michael explained that I only had to register when my sales exceeded the threshold for two years running and advised that I should have my accounts prepared each three months to work out my income tax in advance. I now feel in charge of my finances and I am easily handling the GST and income tax obligations.

MICHELLE, SYDNEY
PERFORMER

Through my accountant I was referred to Michael to assist with the transfer of three Polly Courtin paintings from my super fund to me because I did not want to pay for storage of the works after 30 June this year. Michael produced a valuation report that allowed me to do just that and he also told me I could claim the artworks as a depreciation claim. Fantastic.